Word-miner, watching iChange since '99.

Stupid bureaucrats are killing Pandora

Sometimes you just have to despair at the actions of the labels and their good buddies in government, why is the music industry about the only one to receive this level of trans-national government protectionism.

It sucks and kills innovation – bad for music, bad for artists (because it legitimises old-fashioned Tin Pan Alley money-grabbing) and bad for consumers – though probably quite good for the funny handshake and rolled up trouser leg brigade, but I digress.

I came across the Motley Fool’s account on the slow destruction of Pandora at the hands of iniquitous royalties being demanded for internet radio by SoundExchange. I think they get it just about right,…
“Remember a couple years back, when everybody was talking about music discovery service Pandora? The awesome term “Music Genome Project” was music to many people’s ears. Too bad this innovative service might get pushed back into the box due to burdensome royalty rates,” Alyce Lomax writes.

Now, we know Pandora is one of the most popular iPhone apps out there (at least, it is in the US), and we know one million music fans listen to it daily. And with that kind of reach to get exactly targeted music into the ears of receptive listeners, it’s clearly too good at interesting music fans in new artists for some at the labels – they clearly want to continue to sell Soma, rather than class.

“The Copyright Royalty Board has upped the royalties Internet-based radio outfits must pay on songs, increasing the royalties to 19/100 of a cent per song per listener in 2010 from 8/100 of a cent per song per listener in 2006. In addition, retroactive fees mean that Pandora will have to pay 70% of its projected 2008 revenues, which appears to be a likely doomsday scenario for the service.”

Outrageous – for government to support fees equivalent to 70% of business income is beyond the pale. Take 70% of income out of a business – any business – and you don’t have a business. Ask for it in advance, and you’d be better off in bed. The Mafia ask less for protection money (a joke, but still exactly what you expect from the current administration).

“I think many consumers are catching on that when the industry howls about defending artists, it’s really just talking about defending the major labels’ broken business model, which has been under constant assault ever since the world went digital,” the report observes.

Now, I don’t like to quote verbatim from other people’s work, but I do think this is well-articulated, so in the spirit of praise for the thinking, I’d like to quote this:

“The RIAA and its friends like SoundExchange are populated by,” (the major labels), the report observes, “As far as I’m concerned, their draconian reactions to music’s continuing evolution make them great examples of the types of companies and industries I avoid…

“I mean, come on, services like Pandora do exactly what many music lovers want: to be turned on to artists they may never have heard of otherwise. That’s an innovation that should be celebrated, not condemned. It’s about exposure and promotion that’s geared to our tastes, not somebody else’s taste (and marketing budget).”

…”A company or industry that can turn massive opportunity into a threat should strike investors as a long-term loser.”

Go read this article – it’s everything that’s bad about the bureaucrats, and everything that’s potentially good about the future of music sales, and there is a future in music sales.